AM Comments 09/09/16
Friday, September 9, 2016, 12:09 PM
Submitted by: Dustin Weiner
It looks like a quiet start to the day with both corn and beans trading mixed overnight. Corn is getting hit with some technical selling this morning (read: because of the charts) after a positive day of trade yesterday. It may have been easy to miss, but yesterday’s closing price in corn was the highest since August 22nd! It probably doesn’t feel like it for most producers, but December corn futures are currently over 20 cents higher this month (on what appears to be very little firm fundamental news).
Of course fundamental news will be coming at us soon, not just because harvest is around the corner but we will also get a supply and demand update from the USDA on Monday. Many in the trade are expecting an adjustment lower for US corn yield which helps explain the recent rally in corn. This could be due to extremely early yield reports that appear a little softer. It is hard to put too much stock into that because, well, it’s still extremely early. The recent (and forecasted) rains for much of the Midwest could also play a factor in harvest timing and potential production loss but that also has a chance to not be reflected in the September S&D.
What’s important to price action is that in comparison to the August S&D, it appears the market is already trading a lower corn yield number (and a higher bean number). The August US corn yield was 175.1 bpa and the average trade guess for Monday’s report is 173.4 bpa. The August US soybean yield was 48.9 bpa and the average trade guess for Monday’s report is 49.2 bpa. As always, major variations from what is being traded is what can cause price swings. So don’t be disappointed if the USDA drops corn yield 1.5 bpa and the market doesn’t flinch. Also, don’t forget that the demand side of the equation is equally important and the 16/17 crop year has only just begun. A lot can and will change!
Corn 2 to 4 cents lower
Have a great day!
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